A builder's market?

New construction in Ashland could be sign that housing industry is on the rebound

New homes are beginning to spring up in a handful of Ashland subdivisions where development projects were sidelined as the housing market began its decline in 2006.

Comment

By Sam Wheeler

DailyTidings.com

By Sam Wheeler

Posted Jan. 21, 2013 at 2:00 AM
Updated Jan 21, 2013 at 1:02 PM

By Sam Wheeler

Posted Jan. 21, 2013 at 2:00 AM
Updated Jan 21, 2013 at 1:02 PM

» Social News

New homes are beginning to spring up in a handful of Ashland subdivisions where development projects were sidelined as the housing market began its decline in 2006.

"A year-and-a-half ago, there was nothing happening here; it was a sad deal," said Fred Cox, an Ashland real estate investor who purchased dozens of empty lots in a subdivision near where North Mountain Avenue crosses Interstate 5.

"I started buying lots because I knew it would turn around," Cox said. "I think we're in a hot market right now. Numbers are down, people's confidence is up. This is going to be a good year."

Cox, who partnered with Ashland real estate entrepreneur Laz Ayala to develop some of the roughly 40 lots owned between the pair in the North Mountain subdivision, isn't the only one thinking along those lines.

"This is a different market ... but I think it's going to start moving," said Eric Bonetti, a broker with Royce Real Estate in Ashland.

Royce has exclusive rights to the 17-lot Helman Springs subdivision being developed by Ashland-based Magnolia Investments.

Two homes are built and sold, and two others are under construction there, between Otis and Randy streets in Ashland's Quiet Village neighborhood.

"It could fill in within the next few years — it just depends," Bonetti said.

Compared with the rest of the Rogue Valley, he said, "Ashland is a different ball game ... the market here is better off."

In both subdivisions, the pieces are being picked up after original developers lost the properties to lenders when the housing bubble burst.

The same can be said for the Billings Ranch subdivision at the end of West Nevada Street, where properties foreclosed on by Bank of the Cascades have now been sold back to investors.

The original developer of that neighborhood was Billings Ranch Golf Group, headed by Mike Peru, who pleaded guilty in U.S. District Court in Medford to charges of conspiracy to manufacture, distribute and possess 100 or more marijuana plants, in December.

"I think there is a little bit of a boom going," said Ayala, standing in one of Cox's homes under construction on Stone Ridge Avenue in the North Mountain subdivision. "Prices have bottomed out, interests rates won't go any lower, affordability is the highest it's been in 50 years."

During 2010 and the first half of 2011, most of the North Mountain subdivision was owned by Umpqua Bank, which foreclosed on the properties originally owned by North Mountain Land Company, which was developing the subdivision.

Ayala believes a major reason for the recent burst in residential construction activity in Ashland is because investors, such as himself, were able to purchase foreclosed on properties from banks for such low costs.

"We were able to buy improved lots that we can actually build on today "… but when this runs out, it's going to run out," he said. "Banks are also delaying foreclosures, which allows for this window of opportunity."

Much of that is due to a state law that kicked in last summer requiring major lenders to mediate with homeowners who were in default.

Foreclosures were also slowed by a court decision requiring foreclosures to go through the judicial system, rather than through a more expedited system set up by lenders.

Ayala is banking on Jackson County's inventory of available houses increasing in the next few months, as judicial foreclosures begin entering the market.

"Right now, there is a shortage, and that's good for us," he said.

According to the latest real estate sales numbers compiled by the Southern Oregon Multiple Listing Service, Jackson County's inventory has dwindled from 1,310 units a year ago to 780 at the start of this year. In that period, the inventory based on rate of sales has declined from 7.2 months of housing stock to 3.5 months.

City of Ashland planners are noticing the uptick in activity, said Bill Molnar, community development director for the city.

So far this fiscal year, which ends June 31, the city has issued 25 building permits for single family residential homes, he said.

According to a city report, only 24 of those permits were issued during all of last fiscal year. The city hasn't issued more than 50 a year since the 2006-2007 fiscal year, when it handed out 58.

According to the report, in the 2005-2006 fiscal year, 75 permits for single family residential homes were issued. Between then and now, that number has been as low as 18, in 2008-2009, and as high as 42 in 2010-2011.

"Whether at the end of the next six months we're at 50 and we double it, it's just hard to know," Molnar said. "I'm cautiously optimistic.

"We projected an increase in activity of around 5 percent this year. At this point, in the first half, it's been higher than that."

In south Ashland, construction activity is picking back up in Bud's Dairy subdivision, an area that hasn't seen contractors since the housing market collapsed.

There, nestled off East Main Street between Tolman Creek Road and Clay Street, Medford-based community action agency ACCESS Inc. is developing six housing units for qualified low-income residents, said Cindy Dyer, director of housing and rental assistance for Jackson County's ACCESS Inc.

Construction crews are pouring a foundation for the units, which should be ready for tenants this summer, she said. ACCESS is funding the construction by way of state grant dollars, and purchased the property from the City of Ashland in 2011 using federal grant dollars.

Molnar said the number of people — more than 300 — that visited the city's planning and building counter during September, typically its busiest time of the year, was the highest it's been in the last 5 years.

"It's exciting to see buildings being built "… from our standpoint, it's good for the local economy," Molnar said. "Residential development is just one piece of the picture "… but for those individuals out there that can get residential loans, and are thinking about buying or building a home in Ashland, you probably can't pick a better time."